With inflation that has galloped 100% in the last twelve months, far from improving, banks and consultancies believe that this year
the increase in prices may be "much higher"
than that registered in 2022. This was demonstrated by the last FocusEconomics Consensus Forecast - LatinFocus report, which gathers the opinions of
45 consulting firms and financial entities.
Regarding the exchange front, analysts warned that "the peso will continue
to depreciate
this year amid prolonged monetary financing of the fiscal deficit."
Thus, analysts expect that by December of this year
the official dollar will end at $347.5
and that in the parallel market the US currency will reach $646.4, a gap of 86%.
Today those values are at $202.94 and $379, respectively.
The report, which sees a
slight drop
in its projections for the Latin American economy in 2023, emphasized the
"deterioration of the outlook" for Argentina
this year.
"Inflation rose further in January, while consumer confidence remained deeply pessimistic, and the peso continued to weaken in January and February," the paper noted.
At the same time, the report added:
"A record drought
, coupled with frosts, is affecting soybean and corn crops, prompting the government to start talks with the IMF to soften
foreign exchange
reserve targets
for this year." Due to cases of bird flu, the Government suspended bird exports at the end of February."
All this is the prelude to explaining
a "contraction" of the economy for this year.
"Extremely high interest rates and inflation, along with falling savings, will hit domestic demand, as will an
unfavorable business environment
in the run-up to the October general election. Significant debt,
repayment risks
and pre-election political uncertainty pose downside risks."
This complicated scenario led those consulted to raise their inflation projections compared to what they had anticipated a month ago.
"Our panelists project
average inflation of 98.7%
in 2023, which is 1.9 percentage points more than last month's estimate, and 91.2% in 2024," the study remarked, noting that "the volatility of energy prices and
fiscal largesse ahead of the
October elections are a
key
risk factor ."
The most negative forecasts come from the banks: Supervielle expects GDP to fall 3% this year, while Galicia forecasts a 2.8% drop in the economy.
The only consultancy that matches these projections is Eco Go, which sees a 3% contraction in activity.
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